Under California law, fraud is defined as an intentional deception made for unfair personal gain or causing harm or loss to another person. To that end, the state has dozens of laws on the books criminalizing many types of fraud.
Fraud is primarily considered a "white-collar crime" because it is a non-violent crime based on deceit.
Nevertheless, many fraud crimes are punishable by huge fines and lengthy prison sentences if you are convicted. Some fraud crimes are always prosecuted as felony offenses, while others are "wobblers," meaning they can be charged as misdemeanors or felonies.
Almost none are strictly misdemeanors. Additionally, many instances of fraud are also federal crimes, and in some cases, you could face both state and federal charges.
Put simply; you can violate one of the criminal fraud laws whenever you use deception or deceit to commit an act resulting in an unfair or undeserved benefit or causing harm or loss to someone.
Typically, fraudulent acts are motivated by financial gain or an attempt to avoid criminal exposure. However, numerous acts of fraud are charged and penalized under different state laws, and many have other motives. Many would fall under the category of theft or federal offenses.
Further, fraud offenses are often considered crimes of moral turpitude, which means a conviction could result in the deportation of undocumented citizens. For anyone who holds a professional license, a fraud-related conviction could result in a suspension or revocation of their license.
Additionally, the government might be legally allowed to seize any money or property involved in fraudulent activity. The following is a brief general overview of some of California's most common fraud crimes.
Insurance fraud typically occurs when you attempt to obtain insurance payments or benefits for which you do not qualify. Common types of insurance fraud include, but are not limited to, the following:
- Automobile insurance fraud defined under California Penal Code 548-551 PC. You commit auto insurance fraud when you attempt to collect insurance benefits through deceptive or underhanded means. Common examples include destroying a vehicle to collect insurance, inflating the value of a claim, or willfully staging/causing an accident to trigger an insurance claim.
- Health insurance fraud. From individuals to healthcare professionals, pharmacists, and suppliers - this fraudulent behavior affects private insurance companies and government medical programs like MediCal/Medicaid. Common examples include billing for services not rendered, "upcoding" (billing for a more expensive procedure than the one performed), falsifying medical records, or understating one's income to try and qualify for MediCal benefits.
- Workers' compensation fraud defined under California Insurance Code 1871.4. This type of fraud involves employees who are injured on the job and make false or exaggerated claims to collect higher payments or benefits. Common examples include falsifying information on claims forms, seeking reimbursement for treatments not related to workplace injury, or attempting to receive disability benefits for an injury that does not exist.
- Unemployment/welfare fraud defined under California Welfare and Institutions Code 10980. This type of fraud occurs when you attempt to claim eligibility for unemployment benefits or welfare benefits for which you're not eligible. Examples include lying on your unemployment application about losing your job, job search efforts, inflating your income/expenses to get more benefits, or attempting to claim unemployment in multiple states. Government employees working in the welfare office can also commit welfare fraud by deliberately distributing benefits to unqualified applicants (friends, for example).
Real Estate and Mortgage Fraud
California enforces strict repercussions for anyone who willfully deceives or makes false statements regarding a real estate transaction. Among the more common types of real estate/mortgage fraud include, but are not limited to, the following:
- Foreclosure fraud defined under Civil Code 2945.4. This fraud occurs when someone attempts to take advantage of a homeowner in a foreclosure situation by promising to help them avoid the process or keep their home. Instead, they seek to obtain title or profits from the sale unlawfully.
- Fake or stolen documents defined under Penal Code 115 PC. This fraud occurs when someone knowingly uses forged deeds, powers of attorney, mortgage documents, and other documents to transfer title or obtain money fraudulently.
- Illegal property flipping. While it's not illegal to buy property to improve and "flip" it, it becomes unlawful when you artificially inflate the price through fraudulent appraisals and loan documents.
- Straw buyer schemes. This is a fraudulent scheme in which an agent or broker convinces someone with good credit (the "straw") to take out a loan on behalf of someone else with poor credit, then takes off with the money, leaving the straw buyer legally responsible for the debt.
Identity Theft and Forgery
This fraud category involves using another person's identity or personal information fraudulently or forging official documents to make them appear authentic for the purposes of financial gain. Common types of fraud in this vein include the following:
- Check fraud defined under Penal Code 476 PC. This fraud involves using another person's checks or bank account information to make unauthorized withdrawals, cash counterfeit checks, transfer funds without consent, etc.
- Credit card fraud is defined under Penal Code 484e – 484j PC. Examples of credit card fraud include using someone else's credit card without their authorization, as well as making or selling fake credit cards.
- Fake IDs under Penal Code 470b PC. Making or using a counterfeit driver's license or other official ID card is a crime, even if you don't use that ID for financial gain.
- False impersonation defined under Penal Code 529 PC. Using another person's identity for an improper benefit or to cause harm is a crime.
Other Types of Fraud in California
Many other fraudulent activities are crimes in California but do not fall under the above categories. These include, but certainly are not limited to:
- Gaming fraud is defined under Penal Code 332 PC. The use of sleight-of-hand, trickery, "three-card monte," the pretense of fortune-telling, or other confidence games to entice people into placing bets they're guaranteed to lose.
- Telemarketing fraud as defined under Business and Professions Code 17511.9. Using the telephone to promote a fraudulent or deceitful business scheme or defraud people out of their money.
- Internet fraud. Any scheme conducted online that attempts to defraud people.
- Senior fraud. Fraudulent schemes committed against people aged 65 and older, or other adults who are dependent due to physical or mental disabilities, fall under the umbrella of elder abuse defined under Penal Code 368 PC, and nursing home abuse is subject to additional penalties.
Contact our California criminal defense lawyers to review the case details and legal options if you have been accused of fraud-related crimes.
You can contact us by phone or using the contact form. Eisner Gorin LLP is based in Los Angeles, California.